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Last year Steel Industries had sales of $ 2 7 0 , 0 0 0 , assets of $ 1 7 5 , 0 0

Last year Steel Industries had sales of $270,000, assets of $175,000(which equals total invested capital), a profit margin of 5.3%, and an equity multiplier of 1.2. The CFO believes that the company could reduce its assets by $51,000 without affecting either sales or costs. The firm finances using only debt and common equity. Had it reduced its assets by this amount, and had the debt/total invested capital ratio, sales, and costs remained constant, how much would the ROE have changed?
a. Increase by 1.20%
b. Decrease by 1.20%
c. Increase by 18.89%
d. Decrease by 4.04%
e. Increase by 4.04%
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